Ezion Holdings reported a 37.8% YoY rise in revenue to S$92.6m and a 25.5% increase in net profit to S$45.5m in 2Q14, such that 1H14 net profit met 46% and 43% of ours and the street’s full year estimates, respectively. Results were in line with expectations as we expect more assets to be deployed in 2H14, resulting in sequentially stronger quarters. The group is seeing increased focus on platform and well related work by oil majors in the Asia Pacific, Middle East and West Africa.

As such, Ezion will continue to focus on the investment in service rigs to meet the “strong demand”. Meanwhile, the group has also proposed a bonus issue of one bonus share for every five ordinary shares. Pending an analyst briefing later in the morning, we maintain our BUY rating but put our fair value estimate of S$2.70 under review.

Source: OCBC Research - 31 Jul 2014